UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Case No. 04-2632 (MJD/SER)
Frank J. Steinhauser, III, Mark E.
Meysembourg, and Kelly G. Brisson,
Case No. 05-0461 (MJD/SER)
Sandra Harrilal, Bee Vue,
Lamena Vue, and Steven R. Johnson,
d/b/a Market Group and Properties,
City of Saint Paul
Plaintiffs Frank J. Steinhauser, Mark E. Meysembourg, Kelly G. Brisson, Sandra Harrilal, and Steve Johnson, through their undersigned counsel submit this status Brief pursuant to the Court’s July 6, 2015 Order.
Plaintiffs filed suit May 5, 2004 after Defendant through its officials and inspectors during 2002 through 2005 targeted their low-income rental properties with illegally heightened housing standards and illegal code enforcement tactics and methods and other retaliatory tactics, including repeated false claims of code violations, illegal condemnations of homes and removal of “grandfathering” protections through forced renovations to present code under City “Code Compliance Certifications” in violation of the Minnesota State Building Code, all resulting in displacement of and injuries to “protected class” tenants, removal of habitable housing units, and economic losses to Plaintiffs.
During 2005 through 2008, Plaintiffs participated in extensive discovery and motion practice including unsuccessfully seeking sanctions against the City for its admitted destruction following commencement of the first lawsuit in 2004 of electronic communications of Defendant officials and inspectors and thousands of relevant City housing inspection reports of homes in St. Paul not owned by Plaintiffs. Defendants sought summary judgment in 2008. On December 18, 2008, the Court ordered summary judgment for Defendant and its officials and inspectors.
Plaintiffs appealed the dismissal of their claims in early 2009. On September 1, 2010, the U.S. Court of Appeals for the Eighth Circuit reversed the dismissal of Plaintiffs’ Fair Housing Act (“FHA”) claim alleging that the City’s housing standards, policies and actions had a “disparate impact” on “protected class” tenants occupying and looking for housing in the City. Gallagher v. Magner, 619 F.3d 823 (8th Cir. 2010), reh’g en banc denied, 636 F.3d 380 (8th Cir. 2010), cert. granted, 132 S. Ct. 548 (2011), and cert. dismissed, 132 S. Ct. 1306 (2012).
After an unsuccessful en banc petition, the City petitioned the U.S. Supreme Court for certiorari review and on November 7, 2011, the Supreme Court granted the Petition to decide whether the FHA recognizes claims under a disparate impact theory, and, if so, whether the Eighth Circuit Court of Appeals applied the correct test to analyze the validity of such a claim. After full briefing by the parties and numerous amici curiae in late 2011 into early 2012, the City dismissed its Petition on February 14, 2012 shortly before the oral argument as part of a Quid Pro Quo deal wherein St. Paul agreed to dismiss its Supreme Court appeal in Magner v. Gallagher in return for the United States agreeing not to pursue over $200M in False Claims Act fraud claims against the City. See Congressional Report:
Later that year, Plaintiffs found themselves before this Court in a court ordered settlement conference, assured that this case and trial would not be “kicked down the road”. Following the unsuccessful settlement conference in 2012, the Court ordered the parties to mediation in late 2014 with a Special Master appointed. Plaintiffs Tom Gallagher and Joe Collins agreed to dismiss their claims for non-monetary settlement terms; the remaining three Gallagher Plaintiffs dismissed their claims.
During late 2012 through June 2015, two additional challenges to Fair Housing Act “disparate impact” liability theory came before the United States Supreme Court.
STATUS OF CASE IN RELATION TO
U.S. SUPREME COURT’S JUNE 25, 2015
TEXAS DEPT. OF HOUSING v. INCLUSIVE COMMUNITIES PROJECT
ISSUES THE COURT SHOULD ADDRESS CONSISTENT WITH
THE SUPREME COURT DECISION
On June 25, 2015, the Supreme Court confirmed the holdings by unanimous federal appellate courts since 1968 that “disparate impact,” without evidence of intentional discrimination, is a viable liability theory under the Fair Housing Act. Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc., 576 U. S. ____, ___ (2015) (Kennedy, Slip op. at 11, 17). The Fair Housing Act, Section 3604(a) makes its unlawful to “refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” 42 U.S.C. Section 3604(a) (emphasis added).
While the Supreme Court stated that disparate impact claims should be carefully reviewed to ensure that disparate impact causation evidence is alleged, and that the challenged policy or action is “artificial, arbitrary and unreasonable,” the Court recognized the validity of the “heartland of disparate-impact liability” type claims. Slip op. at 17.
The Supreme Court majority opinion in Texas Dept. of Housing describes two types of disparate impact claims – “heartland” disparate claims and “novel” disparate claims. Slip op. at 18. The “heartland” disparate impact cases noted by Justice Kennedy include lawsuits targeting zoning and occupancy limit ordinances and other housing restrictions that unfairly exclude minorities from certain neighborhoods without sufficient justification:
These unlawful practices include zoning laws and other housing restrictions that function unfairly to exclude minorities from certain neighborhoods without any sufficient justification. Suits targeting such practices reside at the heartland of disparate-impact liability. See, e.g., Huntington, 488 U. S., at 16–18 (invalidating zoning law preventing construction of multifamily rental units); Black Jack, 508 F. 2d, at 1182–1188 (invalidating ordinance prohibiting construction of new multifamily dwellings); Greater New Orleans Fair Housing Action Center v. St. Bernard Parish, 641 F. Supp. 2d 563, 569, 577–578 (ED La. 2009) (invalidating post-Hurricane Katrina ordinance restricting the rental of housing units to only “ ‘blood relative[s]’” in an area of the city that was 88.3% white and 7.6% black); see also Tr. of Oral Arg. 52–53 (discussing these cases). The availability of disparate-impact liability, furthermore, has allowed private developers to vindicate the FHA’s objectives and to protect their property rights by stopping municipalities from enforcing arbitrary and, in practice, discriminatory ordinances barring the construction of certain types of housing units. See, e.g., Huntington, supra, at 18.
Slip op. at 17 (emphasis added - Plaintiffs sustained damages to their property rights and interests here).
Here in the Twin Cities, it is debatable as to the proper affordable housing solution: “build in the suburbs or build in the inner-city.” The Supreme Court noted this would be a novel claim. Id. at 18-19. This is especially true when one considers the immense unmet demand by protected class members for housing in the increasingly gentrified inner-city areas of St. Paul and Minneapolis and St. Paul’s illegal but successful efforts to thin-out availability of low-income rental homes since 2002.
What must not be debatable here is that Defendant’s illegally elevated housing standards and illegal policies and actions do not serve a “valid interest” or valid “government policy”. See Slip op. at 18. The evidence presented by Plaintiffs at the Rule 56 summary judgment stage demonstrates Defendant targeted Plaintiffs and other low-income rental housing providers with illegally elevated housing standards and illegal code enforcement methods that directly caused disproportionate displacement of protected class members and removed habitable housing units from the housing stock disproportionately for protected class members. See Gallagher, 619 at 829-30, 833-38.
While the City should be allowed to maintain a housing policy if the City can demonstrate that its policy or practice had a “ ‘manifest relationship’ ” to a legitimate, non-discriminatory policy objective and was necessary to the attainment of that objective,” 619 F.2d at 834, illegal policies and actions are by their definition unnecessary to meet any claimed legitimate policy objective in a civil society founding on the rule of law. Illegal housing standards and illegal code enforcement methods do not serve any valid government interest. Moreover, even a valid interest cannot justify illegal means.
Plaintiffs have conceded that a municipality has a valid interest in “legitimate,” “legal” standards, policies and actions. Plaintiffs have not agreed that the City’s policies and actions challenged here meet that standard at stage two of the disparate impact burden shifting. This Court must not sanction illegal conduct by municipal officials and employees where the evidence demonstrates knowing violation of law by City officials and employees for over a decade.
St. Paul’s has claimed that code enforcement should be categorically exempt from disparate-impact claims. See Supreme Court Brief for the Petitioners, Magner v. Gallagher, at 54-56. This Court should reject that claim as “The FHA does not immunize municipalities from disparate-impact claims that challenge code enforcement, nor is it sound to infer as much given the Act’s goal of promoting fair housing opportunity”. NAACP Legal Defense & Educational Fund, Inc. (“LDF”), amicus curiae brief at the U.S. Supreme Court in support of Plaintiffs-Respondents opposing St. Paul’s attempt to destroy FHA disparate impact. http://www.scotusblog.com/case-files/cases/magner-v-gallagher/
The Eighth Circuit’s Gallagher decision holds that St. Paul’s code standards and enforcement policies and actions can be the proper subject of a “disparate impact”. 619 at 833-838.
Plaintiffs’ challenge here to St. Paul’s illegally heightened housing code standards and illegal city code enforcement tactics is similar to the “heartland” of disparate-impact liability claims as the City’s illegal housing policies and actions fall within the “housing restrictions that unfairly exclude minorities from certain neighborhoods without sufficient justification”. Slip op. at 17.
A housing disparate impact claim would certainly be “novel” and, without question, fail to meet the “disparate impact” standard if private rental housing providers claimed that a municipality could not enforce its “legitimate codes” because statistics showed protected class members lived in the subject housing. While Defendant has consistently so mischaracterized the legal challenges to City housing policies and actions, Plaintiffs have never taken that absurd position.
Defendant has repeatedly claimed that all City code enforcement is a benefit to tenants, especially to protected class tenants. That argument assumes without evidence that the City’s standards and enforcement are with proper authority and in all ways legal. They are not. See e.g., Builders Association of Minnesota vs. City of St. Paul, Mn. Ct. App., July 23, 2012, No. A11-2270; Bee Vue, et al. vs. City of St. Paul, Mn. Ct. App., April 13, 2010, No. A09-531. Illegally raised housing standards and illegal code enforcement that causes displacement and makes housing unavailable is not good for protected class tenants who have a disproportionately more difficult time findings affordable and available housing and locating replacement housing upon displacement.
The Supreme Court cautioned that disparate-impact liability mandates the “removal of artificial, arbitrary, and unnecessary barriers,” not the displacement of valid governmental policies.” Slip op. at 18. Defendant St. Paul illegally elevated housing standards and illegal code enforcement methods challenged here must not be considered by this Court as “valid government policies”!
Defendant has claimed that: (1) Plaintiffs do not allege the City engaged in “aggressive” enforcement with respect to all low income housing in St. Paul; (2) that other landlords who owned low income housing were not subject to “aggressive” enforcement; (3) Plaintiffs do not allege that the City practiced “aggressive” enforcement at all of their properties; and (4) some of Plaintiffs’ allegations of “aggressive” enforcement relate to properties that were rented by non-protected tenants or were vacant at the time of enforcement. See Supreme Court Brief for the Petitioners, Magner v. Gallagher, at 47-48.
Disparate impact under the FHA does not require that all “protected class” members in the city must be adversely impacted by the targeted, illegally heightened housing standards and illegal code enforcement policies and actions; the only requirement is that members of the protected class be disproportionately and unnecessarily impacted. If all protected class members were adversely impacted by such illegal policies and actions, it certainly would speak strongly toward intentional discrimination.
Burden Shifting by Eighth Circuit Court of Appeals
in Gallagher is Still Valid Law
The Eighth Circuit in Gallagher applied a three-step analysis to Plaintiffs’ disparate impact claim, which under the Supreme Court’s ruling in Texas Dept. of Housing is still valid. The Supreme Court did not reject the burden shifting used by the lower courts or as set forth by HUD in its 2013 Disparate Impact Rule. Slip op. at 4, 18-19.
The burden shifting standard applicable here has been decided by the Gallagher Court and Defendant is barred from further challenge to that standard in these cases. Defendant waived its claim presented the U.S. Supreme Court in 2011 and 2012 that the burden shifting standard used by the Eighth Circuit was inappropriate. Before the U.S. Supreme Court, Defendant City had argued that “enforcement of Saint Paul’s Housing Code does not violate the Fair Housing Act even if the Act imposes disparate impact liability,” claiming that “circuit courts of appeals have generally applied either a burden shifting test or a balancing test,” but the proper test was found in Wards Cove Packing Co. v. Antonio, 490 U.S. 642 (1989).
The law of the case is a doctrine that provides that “when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” See Morris v. American Nat. Can Corp., 988 F.2d 50 (1993) (citing Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 1391, 75 L.Ed.2d 318 (1983)).
The Eighth Circuit in Morris, 988 F.2d. at 52, stated the exception to the law of the case doctrine would apply where “an intervening decision from a superior tribunal clearly demonstrates the law of the case is wrong”. The Supreme Court in Texas Dept. of Housing did not abandon the burden shifting standards applied by the appellate courts for over 40 years. Slip op. at 4, 18-19.
In applying the burden shifting standard in 2010, the Gallagher Court, 619 F.3d at 833-34 stated:
First, Appellants must establish a prima facie case, which requires showing “that the objected-to action[s] result[ed] in ... a disparate impact upon protected classes compared to a relevant population.” Darst–Webbe Tenant Ass’n Bd. v. St. Louis Hous.Auth., 417 F.3d 898, 902 (8th Cir.2005). Stated differently, Appellants “must show a facially neutral policy ha[d] a significant adverse impact on members of a protected minority group.” Oti Kaga, Inc. v. S.D. Hous. Dev. Auth., 342 F.3d 871, 883 (8th Cir.2003).
Appellants are not required to show that the policy or practice was formulated with discriminatory intent. Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926, 934–35 (2d Cir.), aff’d, *834 488 U.S. 15, 109 S.Ct. 276, 102 L.Ed.2d 180 (1988) (per curiam); Smith v. Anchor Bldg. Corp., 536 F.2d 231, 233 (8th Cir.1976). If Appellants establish a prima facie case, the burden shifts to the City to demonstrate that its policy or practice had “ ‘manifest relationship’ ” to a legitimate, non discriminatory policy objective and was necessary to the attainment of that objective. Darst–Webbe, 417 F.3d at 902 (quoting Oti Kaga, 342 F.3d at 883). If the City shows that its actions were justified, then the burden shifts back to Appellants to show “a viable alternative means” was available to achieve the legitimate policy objective without discriminatory effects. Id. at 902–03.
The Gallagher Court, 619 F.3d at 834 stated that “The first component of Appellants’ prima facie case is an identifiable, facially-neutral policy or practice”. The Eighth Circuit in Gallagher determined that Plaintiffs had properly identified a specific policy or policies of Defendant for prima facie purposes to meet the first step of the burden shifting standard. 619 F.3d at 833-34. This was not an issue in Texas Dept. of Housing and thus the issue is settled here under the law of the case doctrine.
The Rule 56 evidence presented to the Gallagher Court demonstrates that the illegal City housing policies and actions are “artificial, arbitrary and unreasonable”:
Appellants have consistently challenged the City’s aggressive Housing Code enforcement practices. The common denominator in Appellants’ affidavits, allegations, and briefs is that the City issued false Housing Code violations and punished property owners without prior notification, invitations to cooperate with DNHPI, or adequate time to remedy Housing Code violations. Punishments included fines, evictions, condemnations, revocation of rental registrations, and the financial burden of Code Compliance Certification. (emphasis added).
The Eighth Circuit in Gallagher provided more detail from the Rule 56 summary judgment record concerning the “Code Compliance Certification” housing policy challenged by Plaintiffs as illegal under the State Building Code:
In addition, the City used a procedure known as “Code Compliance Certification” to require rental properties to meet current housing and building standards. The contours of this procedure are unclear, but it appears that the City required rental property owners to acquire Code Compliance Certification if a property was remodeled or deemed a dangerous structure, a nuisance building, or vacant. Code Compliance inspections were conducted by the City’s Office of License, Inspections, and Environmental Protection, which would evaluate the building’s structure, plumbing, electrical condition, and mechanical condition. Code Compliance Certification allegedly forced property owners to undertake expensive renovations, especially with regard to older properties that were exempt from current building codes under Minnesota law.
619 F.3d at 829-30. Thus, the evidence in Gallagher certainly shows the “artificial, arbitrary and unreasonable” nature of Defendant’s illegal policies and actions.
Substantial Showing that City’s Illegally Raised Housing Standards and Illegal Code Enforcement Methods Caused Disparate Impact
The Supreme Court stated that a disparate impact claim relying solely on a statistical disparity must fail if a plaintiff cannot point to a defendant’s policy as causing the disparity.
Slip Op, Kennedy, J., at 19-20. The Court in Gallagher, 629 F.3d at 834-35, reviewed the Rule 56 summary judgment record, and noted Plaintiffs’ claim did not rest only on statistics, and found substantial “causation” evidence presented:
(c) The City’s aggressive Housing Code enforcement practices increased costs for property owners that rent to low-income tenants. Appellants produced at least six affidavits describing the toll that the City’s aggressive Housing Code enforcement took on their rental business. They reported a substantial increase in costs, resulting in evictions for tenants and “forced sales” of their properties in some cases. These allegations are corroborated by an internal memorandum from the City’s fire marshal in 1995, comparing the Housing Code and the HQS and concluding that the Housing Code was more strict in regard to 82% of the examined categories.
(d) The increased burden on rental-property owners from aggressive code enforcement resulted in less affordable housing in the City. Documents from the City and the Public Housing Authority acknowledged that any decrease in federally assisted rental housing would reduce the amount of affordable housing in the City. Those predictions were supported by the City’s Vacant Buildings Report, which showed that the number of vacant homes listed in the City rose from 367 to 1,466 between March 2003 and November 2007, which was a nearly 300% increase. Further, Appellants submitted affidavits from three tenants who alleged that they endured hardship when their homes were condemned for minimal or false Housing Code violations.
See also, 05-cv-1348, Ecf 223-23, page 4, (Report of Plaintiffs’ expert Don Hedquist - “mandatory renovations under the City’s “code compliance inspection” process significantly increased the costs to providers of housing to the point where forced sales and abandonments occurred – The heightened code standard has contributed to the high number of vacant properties currently in the City”; and Ecf 223-21, pages 3-15 generally).
The Eighth Circuit in Gallagher concluded that there was reasonable demonstration of a direct causal link between the challenged facially neutral City housing policies and actions and the disproportionate impact on protected class members, 619 F.3d at 835:
These premises, together, reasonably demonstrate that the City’s aggressive enforcement of the Housing Code resulted in a disproportionate adverse effect on racial minorities, particularly African–Americans. Viewed in the light most favorable to Appellants, the evidence shows that the City’s Housing Code enforcement temporarily, if not permanently, burdened Appellants’ rental businesses, which indirectly burdened their tenants. Given the existing shortage of affordable housing in the City, it is reasonable to infer that the overall amount of affordable housing decreased as a result. And taking into account the demographic evidence in the record, it is reasonable to infer racial minorities, particularly African–Americans, were disproportionately affected by these events. See 215 Alliance v. Cuomo, 61 F.Supp.2d 879, 889 (D.Minn.1999) (“[M]inority, elderly, and disabled tenants face significant hurdles in locating housing above and beyond the mere shortage of low-income housing Any policy which results in the displacement of low-income tenants will disproportionately affect these particular low-income citizens whose housing options are especially constrained.”). Though there is not a single document that connects the dots of Appellants’ disparate impact claim, it is enough that each analytic step is reasonable and supported by evidence. (emphasis added).
The Eighth Circuit Court of Appeals in Gallagher properly applied the Rule 56 standard of review, and looked at the facts in a light most favorable to the Gallagher housing providers. Fed. R. Civ. P. 56.
Here, St. Paul and its officials and inspectors had every opportunity to follow state and federal law requirements but intentionally chose not to do so. The consistent legal claim by Plaintiffs has always been that the City’s housing policies and actions were illegal and had displaced protected class tenants and unlawfully made housing units unavailable.
Plaintiffs have continued for eleven (11) years to tell the courts and the public that the City had illegally elevated its housing code standards, and then selectively enforced those standards against protected class housing, that inspectors with encouragement from City officials had falsely claimed that serious code violations existed when in fact claimed serious violations were non-existent, that City officials and staff illegally removed State Building code grandfathering protections with demands that older homes meet current codes, thereby keeping housing units off-line for extended periods of time, and that City employees and officials had used other illegal and dirty tactics to force legitimate low-income landlords out of business.
Imposing disparate impact liability here does not place the Defendant in a double bind of liability. While “The FHA … does not put housing authorities and private developers in a double bind of liability, subject to suit whether they choose to rejuvenate a city core or to promote new low-income housing in suburban communities,” Texas Dept. of Housing, Slip Op, Kennedy, J., at 19, breaking the law is not a legitimate option and claiming sanctuary for illegal housing policies is shameful conduct by City officials. The challenged illegal policies and actions against Plaintiffs and other similar housing providers were wide spread, not a one-time event. Texas Dept. of Housing, Slip op. at 20.
Moreover, Defendant was funded by federal housing grants during 2000 through 2005, at the very time Defendant planned, adopted and implemented its illegally elevated housing standards and illegal code enforcement methods against Plaintiffs and other low-income rental housing providers. As a condition of the federal funding, Defendant had a mandatory duty to conduct an Analysis of Impediments to Fair Housing Choice (“AI”) including on the specific question of whether city housing and building code policies and actions would disparately impact minorities and the disabled. See 24 CFR 91.225(a)(1); 91.325(a)(1); and 91.425(a)(1)(I). These federal funding regulations require Defendant to take into account building codes and enforcement for purposes of local planning and redevelopment and to consider any adverse impact of these public sector policies and actions on low-income housing supply. See C.F.R. § 91.210(e). Defendant’s failure to conduct legitimate “AIs” is further reason the Gallagher Court’s holding that Plaintiffs have met their prima facie burden should stand. Defendant’s failure to perform the required “AI” on the challenged illegal housing policies and actions leaves Plaintiffs without the “AI” evidence that would have been available but for Defendant’s failure to follow federal law.
Moreover, as a direct consequence of Defendant’s failure to conduct the required “AI” on housing standards and actions, and on the illegal housing policies and actions, and to take actions to eliminate those impediments, Defendant will not be able as a matter of law to meet its burden at stage two. Defendant’s failure to conduct the required “AI” and take appropriate actions to eliminate impediments, shows that its policies and actions are not legitimate.
Claimed “Rat Infestation” and Lack of Heat – Deliberate Falsehoods
The majority and dissenting opinions in Texas Dept. of Housing mistakenly stated that the Magner v. Gallagher case was settled. Slip op., Kennedy, at 22; Slip op., Alito dissenting, p. 2, fn. 1. The Gallagher, et al. Plaintiffs did not settle with St. Paul until early this year. It was the City who dismissed its Supreme Court appeal without settlement with any of the twelve Plaintiffs in February 2012.
Justice Alito’s dissenting opinion in Texas Dept. of Housing, joined by Chief Justice Roberts and Justices Scalia and Thomas, contains a more troubling error. Slip op., Alito dissenting, at 1-2. The dissent misstated the Magner v. Gallagher Rule 56 summary judgment evidence presented by the parties to this Court and the Eighth Circuit Court of Appeals, and contained in the record before the Supreme Court. In referring to the Magner case that was no longer before the Court, and which had not been presented to the Court in any event on the “facts,” but solely for determination of the “disparate impact” FHA statutory interpretation question, the dissent in Texas Dept. of Housing looked at the claimed evidence from Magner in a “light most favorable” to the City, citing St. Paul’s claimed “facts” as the established facts, but doing so without any support in the Rule 56 record, claiming the City’s efforts were in “good faith”. Slip op., Alito dissenting at 29 (“As Magner shows, when disparate impact is on the table, even a city’s good-faith attempt to remedy deplorable housing conditions can be branded “discriminatory.”)
Whether one looks at all the evidence in a light most favorable to either party, there is a complete lack of admissible evidence of a “rat infestation” or a “rat’s nest” in any of the Steinhauser, et al. or Harrilal, et al. or Gallagher, et al. rental homes.
The Rule 56 evidence does not reveal a “good-faith” effort by the City.
There is also a complete lack of admissible evidence of any rat inside any of the over 100 subject rental homes owned by the Plaintiff housing providers in these cases. The hearsay statement of a claimed rat inside one home was made by a tenant who was behind in rent payments, a statement made to the police and contained within a hastily concocted police report. Case 04-cv-02632, Ecf 201-52, pp. 1-4. The City and its attorneys failed to present to the Court any admissible evidence from that tenant (or any other tenants), from the police officer who wrote the report, or from any other source, to support the City’s “rat infestation” claim at the summary judgment stage of the litigation.
The evidence in a light most favorable to Plaintiffs demonstrated the falsity of Defendant’s claims. See e.g., 05-cv-1348, Ecf 223-2, pages 1, 14-20 (910 6th Street East property), and pages 23-27 (1024 Euclid property). The unsubstantiated, out-of-court, hearsay claims became “rat infestation, or a “rat’s nest,” the established facts as claimed by Justice Alito. Texas Dept. of Housing. Slip op., Alito dissenting at 1-2.
Defendant and its officials have also repeatedly claimed publicly that the City has established there was a lack of heat in Plaintiffs’ rental dwellings. This claim is also a long, often repeated lie without admissible evidence in the record in these Fair Housing cases.
There is no admissible evidence in the Rule 56 summary judgment record to support the claim of lack of heat in the traditional sense in any of the over 100 rental properties. The actual admissible factual evidence presented to this Court on the issue looking at evidence in a light most favorable to Plaintiffs revealed that a licensed heating contractor found the thermostat had been turned off and the furnace and heating system were properly working in the housing unit claimed by the City to be without heat. See 05-cv-1348, Ecf 223-2, page 24-25, ¶72 (1024 Euclid); see also pages 17-18, ¶52 (910 6th Street East – furnaces working properly).
The dissent in Texas Dept. of Housing ignored the Supreme Court’s own civil procedural rule for review of Rule 56 summary judgments and repeated the City’s false statements in the dissent’s time immortal opinion, false statements of claimed facts knowingly broadcast by St. Paul city officials to the entire country for over a decade while the City has delayed the Plaintiffs’ opportunity to present a Minnesota jury with admissible and undisputable evidence to the contrary. If Defendant City officials truly believe Plaintiffs were so deficient at providing rental housing in St. Paul, why is it that City officials have lied to the Courts and the public and tried everything for eleven years to delay a jury trial that would finally provide the City the opportunity to prove its false facts?
Finally, Plaintiffs have presented strong evidence to meet part three of the disparate impact burden shifting standard. Even if the City shows that its actions were justified, Plaintiffs have shown “a viable alternative means” was available to achieve the legitimate policy objective without discriminatory effects. 619 F.3d. at 834. The Gallagher Court, 619 F.3d at 837-38, noted the PP2000 code enforcement program as one identified alternative that would meet Plaintiffs’ burden. Plaintiffs also presented the City’s preferential treatment of its sister government housing agency as another viable alternative. Additional alternatives were available to Defendant including not violating the State Building Code protections to property owners, avoiding illegal enforcement tactics, and conducting a legitimate “Analysis of Impediments to Fair Housing Choice” looking at how these challenged policies negatively impacted protected class housing and then taking required action to eliminate the identified impediments/barriers. See The Consolidated Plan regulations (24 C.F.R. 91).
Plaintiffs suffered destruction of their businesses and substantial negative impact on their personal lives at the hands of Defendant’s illegal housing policies and illegal actions that wrongfully drove them and their protected class tenants out of town. Plaintiffs’ bright futures are long gone. Plaintiffs’ reputations were destroyed by Defendant after years (decades for some) of hard work by Plaintiffs to create and maintain their rental business. Now after eleven (11) years of litigation in federal court without a trial, Plaintiffs are very upset and disappointed to say the least that the Supreme Court would violate its own rules to help St. Paul dodge its responsibility for its longstanding illegal policies and actions.
Plaintiffs wonder how the Supreme Court reasonably expects citizens to have respect for the law and the court system when the Court refuses to follow its own rules. How can citizens believe the court system is fair and impartial when the system sides with the perpetrator of illegal acts to the determent of the victims?
Plaintiffs strongly oppose the anticipated request of Defendant to use the Supreme Court’s decision in Texas Dept. of Housing to try to muddy the waters that clearly reveal a very real and dark image of illegal City conduct for over a decade. The illegal City housing policies and actions have thinned-out and decreased the availability of protected class rental homes in the City and made formerly existing rental housing units unavailable to the thousands of protected class members in the Twin Cities.
Further delay of trial through yet another summary judgment motion (two such motions already), or additional Eighth Circuit review, will only further deny justice to Plaintiffs and buy City officials more time to continue their illegal policies and increase the damage to protected class members looking for affordable and available housing.
The Supreme Court’s decision and announced cautionary standard in Texas Dept. of Housing does not negatively impact Plaintiffs’ disparate impact claim. Plaintiffs’ disparate impact claim falls within the “heartland” disparate impact claims challenging local government barriers to protected class housing that have been successfully litigated since 1968. Illegally raised housing standards, illegal code enforcement, false claims of code violations, illegal condemnations, and illegal removal of State Building Code authorized grandfathering protections for older homes are barriers to protected class housing, and properly challenged under the disparate impact liability theory.
Plaintiffs have demonstrated sufficient evidence of direct causation of disparate impact on protected class members by the challenged facially neutral housing policies and actions. The City’s illegally elevated housing standards and illegal code enforcement methods directed at Plaintiffs fall by definition within the “artificial, arbitrary and unreasonable” policies prohibited by the Fair Housing Act.
This Court must not assist in any further delay of justice. After eleven years, the Plaintiff housing providers are still waiting for their right to present their evidence to a jury! Memories fade. Documents disappear. A jury’s interest wanes. Eleven years is long enough. Plaintiffs respectfully request that the Court set a jury trial for Plaintiffs’ claims.
Dated: August 3, 2015
SHOEMAKER & SHOEMAKER, P.L.L.C.
By: s/ John R. Shoemaker
John R. Shoemaker (Atty Lic. # 0161561) Paul F. Shoemaker (Atty Lic. # 0178226)
Highland Bank Building, Suite 410
5270 West 84th Street
Bloomington, MN 55437
City of Saint Paul's attempt to cover up the illegal housing activities,
DEFENDANT’S STATUS BRIEF
At the inception of this dispute, sixteen plaintiffs filed three cases, collectively asserting thirty-two causes of action against eighteen defendants, which included the City of St. Paul (the “City”) and a host of City officials and employees. Today, five plaintiffs, one defendant, and one cause of action remain: Plaintiffs assert the City violated the Fair Housing Act based on a disparate impact theory. The remaining plaintiffs are landlords or former landlords, and paradoxically, they claim the City’s enforcement of its housing code against their dilapidated properties created a disparate impact on minorities and disabled tenants by decreasing the availability of low-income housing.
Earlier this year, the Court stayed this action pending issuance of a decision in a case pending before the United States Supreme Court. The Supreme Court issued that decision on June 25, 2015. Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015) (“Texas”). The Court has asked the parties to brief the status of the case in light of this ruling. Doc. No. 348.
The impact of the Texas decision on this case is clear: Plaintiffs’ sole claim against the City must be dismissed. To be sure, the Supreme Court in Texas acknowledged that disparate impact claims may be asserted under the Fair Housing Act. But it is equally clear that in doing so, the Court imposed cautionary requirements that must be met before a plaintiff can establish a prima facie case. In the present case—which the Supreme Court specifically identified by name in its decision—Plaintiffs have failed to satisfy the mandatory requirements identified in Texas. Specifically, Plaintiffs have failed to establish the existence of an actual City policy that resulted in discrimination, and have similarly failed to establish the necessary robust causal connection between a City policy and its purported discriminatory effects. Both elements are mandatory. Even if Plaintiffs had complied with the Supreme Court’s prima facie requirements, Plaintiffs’ claim still fails post-Texas because all parties agree that the City had a legitimate governmental objective, and the Supreme Court opined that legitimate objectives cannot give rise to disparate impact liability. Any one of these issues alone is fatal to Plaintiffs’ case. Taken together, it is beyond dispute that Plaintiffs have no viable claim against the City of St. Paul.
The Court can and should dismiss this case sua sponte. See Harper v. Va. Dep’t of Taxation, 509 U.S. 86, 97 (1993) (“When [the Supreme] Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review . . . .”); Smith v. Boyd, 945 F.2d 1041, 1042-43 (8th Cir. 1991) (acknowledging district court’s power to dismiss sua sponte a complaint for failure to state a claim); see also Trujillo v. Crescent Jewelers, 243 F.3d 550, 2000 WL 1768150, at *1 (9th Cir. 2000) (unpublished table decision) (“Federal courts may, in fact, dismiss sua sponte pursuant to F.R.C.P. 12(b)(6) when it is clear that the plaintiff has not stated a claim upon which relief may be granted.”).
Following the completion of discovery in this case, the defendants moved for summary judgment on all claims, which the Court granted in full. Steinhauser v. City of St. Paul, 595 F. Supp. 2d 987, 1020-21 (D. Minn. 2008) (Ericksen, J.). In opposing dismissal of their disparate impact claim, Plaintiffs argued that the City’s enforcement of its housing code was a facially-neutral policy that allegedly had a disparate impact on minorities, and contended that the City should have instead enforced the federal Housing Quality Standards (“HQS”). Id. at 997. The Court held Plaintiffs’ claim failed because Plaintiffs lacked “evidence establishing what rents are under the City’s housing code, what rents would be under the HQS, and the percentages of African-Americans and non-African-Americans who could not afford to rent in the City because the City enforced the housing code rather than the HQS.” Id. at 997-98. The Court rejected Plaintiffs’ theory that the City’s housing shortage was evidence of disparate impact on causation grounds.
1 In the alternative, and at a minimum, the City respectfully asks the Court to allow the City to file a renewed motion for summary judgment in light of the Texas decision.
Specifically, Plaintiffs had presented no evidence that enforcement of the housing code caused the housing shortage, and no evidence that an increase in vacant buildings in the City was caused by enforcement of the housing code. Id. at 998.
Plaintiffs also failed to show that “the HQS permits Defendants to achieve their legitimate, non-discriminatory policy objectives without discriminatory effects,” which barred Plaintiffs’ claim. Id. at 999. Further, Plaintiffs did not dispute that “providing minimum property maintenance standards, keeping the City clean and housing habitable, and making the City’s neighborhoods the safest and most livable of any in Minnesota” are legitimate and non-discriminatory policy objectives. Id. at 998-99. Plaintiffs also conceded that enforcement of the housing code has a manifest relationship to these objectives and that enforcement of the housing code is necessary to achieving those objectives. Id. at 999. Plaintiffs failed to point to evidence that the HQS was a viable alternative to the housing code or that enforcement of the HQS would have a less discriminatory effect. Id. The Court concluded: “It is for the City, not the Court, to strike the proper balance between the need for safe, clean, and habitable housing and the need for low-income housing.” Id.
Plaintiffs appealed, and a panel of the Eighth Circuit reversed. The panel held that this Court’s characterization of the policy at issue was too narrow and that the appropriate analysis should center on an alleged policy of “aggressive code enforcement” by the City. Gallagher v. Magner, 619 F.3d 823, 834 (8th Cir. 2010). “Aggressive code enforcement” created a disparate impact on African-Americans, in the panel’s view, because (1) the City had a shortage of affordable housing, (2) African-Americans disproportionately relied on low-income housing, (3) aggressive code enforcement increased the costs to property owners who rent low-income housing, and (4) the increased burden on property owners from aggressive code enforcement resulted in less low-income housing. Id. at 834-35. The panel reasoned: “Though there is not a single document that connects the dots of Appellants’ disparate impact claim, it is enough that each analytic step is reasonable and supported by evidence.” Id. at 835.
The City petitioned for rehearing of the panel’s decision en banc, but the petition was denied. Gallagher v. Magner, 636 F.3d 380, 381 (8th Cir. 2010). Dissenting, Circuit Judge Colloton, joined by four others, felt it “appropriate to consider whether the purpose of the [FHA] extends to declaring a city liable for disparate impact caused by its ‘aggressive’ enforcement of a housing code.” Id. at 383-84. The Supreme Court granted the City’s petition for certiorari, 132 S. Ct. 548 (2011), but later dismissed the petition by agreement of the parties, 132 S. Ct. 1306 (2012).
Following remand, the Court (Rau, M.J.) conducted a settlement conference. Doc. No. 311. The parties agreed to continue the settlement conference pending the Supreme Court’s decision on the petition for certiorari in Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., No. 11-1507 (U.S.). Doc. No. 320. After the petition in Mount Holly was also dismissed, Plaintiffs requested that the Court continue the settlement conference. Doc. No. 321.
In 2014, the parties again reached an impasse in settlement discussions, but subsequent motion practice and mediation reduced the number of parties and issues. In September, the Court granted Defendants’ motion for partial summary judgment (which Plaintiffs did not oppose) and dismissed the claims against all Defendants except the City, as well as Plaintiffs’ claim for punitive damages. Doc. No. 341. The Court referred the matter to Special Master Arthur J. Boylan for mediation, Doc. No. 343, and nine plaintiffs stipulated to the dismissal of their action thereafter, No. 05-CV-1348, Doc. Nos. 298-99.
At a status conference on January 30, 2015, the Court stayed further proceedings pending the Supreme Court’s decision in Texas, which issued on June 25, 2015. Doc. No. 346. On July 6, the Court asked the parties to file briefs “indicating the status of the case as it relates to this recent decision and what issues the Court should address consistent with the Supreme Court Decision.” Doc. No. 348. The City submits this brief in response to the Court’s order. As explained below, the City respectfully asks the Court to dismiss Plaintiffs’ disparate impact claim with prejudice in light of Texas.
In Texas, the Supreme Court found that disparate impact claims may be viable under the Fair Housing Act, but in doing so, announced specific requirements for such claims. 135 S. Ct. at 2524. First, the Court announced that “governmental entities . . . must not be prevented from achieving legitimate objectives, such as ensuring compliance with health and safety codes.” Id. Second, the Court emphasized the need for plaintiffs to demonstrate a “robust causality requirement” to “ensure that racial imbalance does not, without more, establish a prima facie case of disparate impact.” Id. at 2523 (quotation and alteration omitted). It is clear that Plaintiffs’ disparate impact claim cannot survive in light of the Court’s stated requirements. I. Plaintiffs’ Claim Interferes With The City’s Legitimate Objectives And Therefore Must Be Dismissed.
The principles announced in Texas mandate dismissal of this matter. In that case, the Supreme Court announced several explicit “safeguards” and “cautionary” requirements that severely limit disparate impact liability under the Fair Housing Act. Plaintiffs cannot satisfy the requirements laid out in Texas.
In Texas, the Supreme Court emphasized that disparate impact liability under the Fair Housing Act must not prevent governmental entities from “achieving legitimate objectives, such as ensuring compliance with health and safety codes.”2 135 S. Ct. at 2524. The Court expressed concern that, without such a requirement, disparate impact liability could displace valid governmental priorities and “set our Nation back in its quest to reduce the salience of race in our social and economic system.” Id. Disparate impact lawsuits against government entities, therefore, must be limited and used solely to remove “artificial, arbitrary, and unnecessary barriers.” Id. Stated differently, governments are not susceptible to disparate impact claims unless their policies are artificial, arbitrary or unnecessary. Id. (citing Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971)). Plaintiffs
2 The U.S. Court of Appeals for the First Circuit has already taken heed of this cautionary language and affirmed summary judgment against plaintiffs who argued the closure of a dilapidated government building (with resulting staffing changes) created disparate impact employment discrimination. Abril-Rivera v. Johnson, --- F.3d ----, 2015 WL 4578404, at *7, 11 (1st Cir. July 30, 2015). The court quoted the Texas decision’s admonitions that disparate impact liability “must also be limited as applied to government entities so as to avoid ‘inject[ing] racial considerations into every [agency] decision,’” id. at *7 (quoting Texas, 135 S. Ct. at 2524), and that “‘[t]he [statute] is not an instrument to force [agencies] to reorder their priorities.,’” id. at *11 (quoting Texas, 135 S. Ct. at 2522). cannot prevail on their disparate impact claim in light of these new Supreme Court requirements.
First, the Supreme Court itself—in a virtually unprecedented move—suggested that this particular case could not survive following the Court’s ruling. The Court specifically noted that the Eighth Circuit’s holding in Gallagher v. Magner “was decided without the [benefit of] the cautionary standards announced in this opinion . . . .” 135 S. Ct. at 2524. In doing so, the Supreme Court reiterated that its requirements should have a powerful, limiting effect on disparate impact liability and implied that the present case could not meet these newly-announced requirements. The Court stopped just short of declaring outright that Plaintiffs’ claim against the City is no longer viable, but only because it was reluctant to rule on “a case that is not pending” before it. Id. Still, the majority went on to bolster its argument that governments like the City must not be prevented from ensuring compliance with health and safety codes by commending the dissenting opinion’s “well-stated” assessment of the Gallagher case, id., which opened with the exclamation: “No one wants to live in a rat’s nest . . . [s]omething has gone badly awry when a city can’t even make slumlords kill rats without fear of a lawsuit,” 135 S. Ct. at 2532 (Alito, J., dissenting). The Supreme Court’s targeted and critical references to the Eighth Circuit decision in Gallagher demonstrate that the Supreme Court, which crafted the requirements at issue, agrees that Plaintiffs’ claims cannot succeed as a matter of law.3
3 All nine justices joined opinions criticizing the Gallagher decision. Second, under the Court’s new requirements, a disparate impact claim that prevents a government entity from achieving legitimate objectives must be dismissed. Indeed, the Supreme Court stated that it was imposing requirements to limit “disparate-impact liability . . . to protect potential defendants against abusive disparate-impact claims” that would prevent governments from achieving legitimate objectives. 135 S. Ct. at 2524.
Applied here, Plaintiffs have commenced “abusive” disparate impact litigation because they seek to prevent the City from achieving a legitimate governmental objective: namely, ensuring the health and welfare of its residents. The City’s housing code strives to make sure that every residence is safe and non-hazardous. The housing code, however, is ineffective and worthless if the City is not able to enforce it. Therefore, the City has a legitimate interest in not only establishing a housing code but also actually enforcing it—even if that means certain landlords with rodent-infested properties and other problems will receive more citations than their neighbors.
There can be no question that maintaining and enforcing a housing code is a legitimate governmental objective. For one, the Supreme Court expressly stated that “ensuring compliance with health and safety codes” is a legitimate objective. Id. Even Plaintiffs have conceded that these objectives are legitimate. See Gallagher, 619 F.3d at 837 (“Appellants concede that enforcement of the Housing Code has a manifest relationship to legitimate, non-discriminatory objectives.”); Steinhauser, 595 F. Supp. 2d at 999 (“Plaintiffs do not dispute that these objectives are legitimate and nondiscriminatory, that enforcement of the housing code has a manifest relationship to these objectives, or that enforcement of the housing code is necessary to achieving those objectives.”). In other words, all parties (and the Supreme Court) agree that the City has legitimate governmental objectives.
It is equally clear that punishing the City for enforcing its housing code would preclude the City from achieving its objectives of resident health and safety. If the City is sued whenever it issues housing code violations, it will have to stop all efforts to enforce the housing code and landlords will be able to ignore gas leaks, exposed wires, broken windows, and rodent infestations without consequence. Texas addresses this dilemma head-on and clarifies that if a disparate impact lawsuit prevents a government from achieving legitimate objectives, it is an “abusive” claim that cannot prevail. 135 S. Ct. at 2524. That is, the Supreme Court believes health and safety trump disparate impact claims. Under the limitations announced in Texas, plaintiffs cannot succeed with their disparate impact claim against the City, and it must be dismissed.
Third, Plaintiffs do not have a disparate impact claim against the City because the City’s housing code is not artificial or arbitrary, nor does it amount to an unnecessary barrier. See id. Again, the Supreme Court has narrowed the availability of disparate impact lawsuits to “artificial, arbitrary, and unnecessary barriers.” Id. The fact that the City has a legitimate government interest in maintaining health and safety codes precludes any argument that enforcing the City’s housing code constitutes an “artificial, arbitrary, and unnecessary barrier.” Rather, as this Court has recognized, the City’s housing code provides “minimum property maintenance standards,” keeps the City’s housing “clean” and “habitable,” and makes “the City’s neighborhoods the safest and most livable of any in Minnesota.” Steinhauser, 595 F. Supp. 2d at 998-99.
For all these reasons, the City’s enforcement of its housing code to achieve legitimate objectives cannot give rise to disparate impact liability under the Supreme Court’s holding. The Court’s inquiry can and should end there, and Plaintiffs’ disparate impact claim should be dismissed.
II. Under The Texas Requirements, Plaintiffs Have Failed To Establish A Prima Facie Case Of Disparate Impact.
In Texas, the Supreme Court stated that “a disparate-impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity.” 135 S. Ct. at 2523. “A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact.” Id. Thus, Plaintiffs carry the burden on alleging (and ultimately proving) two separate elements: first, they must allege and prove that there is an actual policy; and second, they must allege and prove that the policy is the cause of discriminatory effects. See id. Here, Plaintiffs have failed in both regards.
A. Plaintiffs Have Not Shown The Existence Of A Policy Giving Rise To Their Disparate Impact Claim.
According to the Supreme Court, “a disparate-impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity.” Id. The requirement “protects defendants from being held liable for racial disparities they did not create.” Id. Here, Plaintiffs have not identified the requisite policy.
As stated in their Complaints, Plaintiffs allege that members of the City’s housing department, as well as members of the City’s fire department, “intentionally and maliciously commenced and thereafter continued a discriminatory policy, custom and pattern of code enforcement conduct that aggressively targeted Plaintiffs and other St. Paul landlords . . . .” See, e.g., No. 04-CV-02632, Doc. No. 60 ¶ 234. In other words, at the inception of this case, Plaintiffs alleged that the “policy” at issue was “code enforcement conduct that aggressively targeted Plaintiffs and other St. Paul landlords.” Id. Despite years of discovery, motions and briefing, however, Plaintiffs have never been able to establish that such a policy existed. Plaintiffs have never identified any documents describing a City policy of targeting certain landlords. They have never demonstrated evidence showing when such an alleged policy was created or by whom. Even accepting Plaintiffs’ allegations as true, Plaintiffs have never provided any proof whatsoever that the City itself instituted and approved of a policy focusing on particular landlords. At best, they have alleged (but not established through evidence) that a handful of individuals aggressively enforced the housing code against Plaintiffs.
In Texas, the Supreme Court specifically noted that in some circumstances, a plaintiff “will not easily be able to show” that a policy is causing a disparate impact because it “may not be a policy at all.” 135 S. Ct. at 2523. The Supreme Court pointed out that plaintiffs challenging actions and decisions, especially one-time decisions, may struggle to establish the existence of a policy. Id. at 2523-34. Here, Plaintiffs cannot show that the supposed particular actions of distinct individuals on sporadic occasions constitute a City-wide policy.
Plaintiffs’ failure to point to a clear and established policy is now fatal to their claim. The Supreme Court instructed that disparate impact plaintiffs must point to a policy causing disparity or their claims will fail. Id. at 2523. The rationale behind the requirement is straightforward. Plaintiffs must establish the specific policy at issue so that defendants are given an early opportunity to defend themselves. Id. at 2512. More precisely, the Supreme Court has held that an “important and appropriate means of ensuring that disparate-impact liability is properly limited is to give housing authorities . . . leeway to state and explain the valid interest served by their policies.” Id.
If Plaintiffs cannot point to a specific policy, the City should not be obligated to defend itself. The Supreme Court also stressed the need for plaintiffs to identify the policy at issue in a case early on—calling for allegations at the pleading stage and a “prompt resolution” of cases that do not establish a prima facie case of disparate impact. Id. at 2523. Indeed, two other district courts applying Texas have already reached this conclusion: Texas requires a plaintiff to actually identify a policy, not the absence of a policy or the mere existence of a statistical disparity. City of Los Angeles v. Wells Fargo & Co., No. 2:13-CV-09007, 2015 WL 4398858, at *8 (C.D. Cal. July 17, 2015) (appeal pending); Sidlow v. Nexstar Broad., No. 1:14-CV-0657, 2015 U.S. Dist. LEXIS 100570, *8 (E.D. Cal. July 30, 2015) (holding Texas requires plaintiff to identify policy in employment discrimination case). Here, Plaintiffs alleged a purported policy at the pleadings stage but have been unable to demonstrate the existence of such a policy, despite the nearly ten years that followed. The burden was on Plaintiffs to identify an actual policy underlying their disparate impact claim and they failed to do so. Accordingly, the Texas decision calls for “prompt resolution” of this case and Plaintiffs’ claim against the City should be dismissed with prejudice.
B. Plaintiffs Cannot Meet The “Robust Causality Requirement” Set Out By the Supreme Court.
Even if Plaintiffs could identify and establish an actual City policy at this late stage (they cannot), their claims against the City still fail. Pursuant to the Supreme Court’s decision, a “plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact.” 135 S. Ct. at 2523 (emphasis added). The causal connection cannot be based on inferences or conjecture—it must be “robust,” because “racial imbalance . . . does not, without more, establish a prima facie case of disparate impact.” Id. (citation and quotations omitted); see also City of Los Angeles, 2015 WL 4398858, at *6, 8 (highlighting “robust causality” requirement in Texas and rejecting plaintiff’s statistical evidence as insufficient). Plaintiffs are long past the pleading stage and have not made a “robust” causal connection between any alleged policy and the alleged discriminatory effects of such policy. Under the rubric of Texas, Plaintiffs have not made out a prima facie case of disparate impact. Previous rulings in this case illustrate Plaintiffs’ lack of any causal evidence, much less “robust” connections. In her 2008 opinion granting summary judgment for the City, Judge Ericksen concluded that Plaintiffs did not have any evidence to support a causal nexus between a governmental policy and a disparate impact:
First, Plaintiffs contend that the City’s affordable housing shortage supports a conclusion of disparate impact. No evidence suggests that Defendants’ enforcement of the housing code caused or contributed to the City’s affordable housing shortage. Jon Gutzmann, Executive Director of PHA, identified insufficient federal funding as contributing to the affordable housing shortage. He did not identify the housing code as a contributor. His testimony is undisputed. The existence of an affordable housing shortage does not support Plaintiffs’ claim of disparate impact.
Steinhauser, 595 F. Supp. 2d at 998.
Second, Plaintiffs put forth the Vacant Buildings report as evidence of disparate impact. According to Plaintiffs, the number of vacant homes in the City increased from 367 in 2003 to 1466 in 2007. Relying on the statement in the Vacant Buildings report that “foreclosed properties are or were disproportionately renter-occupied,” Plaintiffs argue that enforcement of the City’s housing code caused the increase in vacant buildings. The Vacant Buildings report suggests that an increase in foreclosures caused the increase in vacant buildings and identifies equity stripping, predatory lending practices, sub-prime lending, unforeseen life events such as loss of income and health issues, increasing interest rates, and unemployment levels as causes of foreclosures. The Vacant Buildings report does not identify enforcement of the City’s housing code as a cause of increased vacancies or foreclosures. Therefore, the Vacant Buildings report does not support Plaintiffs’ disparate impact claim. Plaintiffs have not made a prima facie case of disparate impact.
Id. Judge Ericksen’s reasoning was prescient; as contemplated in the Supreme Court’s Texas opinion, it recognized “multiple factors” influencing availability of housing in St. Paul, and it noted the complete absence of any evidence showing the City caused a discriminatory impact. See 135 S. Ct. at 2523-24. Certainly, Plaintiffs did not—and could not—meet the “robust” causality requirement back in 2008. The Supreme Court’s recent decision confirms Judge Ericksen’s initial ruling in this case.
Similarly, the Eighth Circuit’s opinion demonstrates that Plaintiffs have not met the “robust causality requirement” of Texas. The Eighth Circuit conceded that Plaintiffs did not have a “single document that connects the dots of [the] disparate impact claim.” Gallagher, 619 F.3d at 835. The appellate court gave Plaintiffs every benefit of the doubt, however, and permitted their disparate impact claim to survive, but not on the basis of any “robust” evidence. Instead, the Eighth Circuit supported its decision with a series of inferential leaps that are no longer acceptable post-Texas. Id. at 834-36. The court relied on assumptions and conjecture in holding:
Given the existing shortage of affordable housing in the City, it is reasonable to infer that the overall amount of affordable housing decreased as a result [of the City’s policy]. And taking into account the demographic evidence in the record, it is reasonable to infer racial minorities, particularly African–Americans, were disproportionately burdened.
Id. at 835 (emphasis added).
The Eighth Circuit’s decision is no longer good law, as the Supreme Court has now clarified that (i) racial imbalance, without more, is insufficient; and (ii) proof of causality must be robust, not inferential. 135 S. Ct. at 2523. The Eighth Circuit’s ruling exposes the weaknesses of Plaintiffs’ case and reveals why Plaintiffs’ case must be dismissed in light of Texas.
In light of the Supreme Court’s recent ruling in Texas, Plaintiffs’ disparate impact claim against the City of St. Paul cannot survive for at least three independent reasons: (1) the City has a legitimate objective in enforcing its housing code and legitimate objectives cannot be subject to disparate impact claims, (2) Plaintiffs have not identified a clear policy that would give rise to disparate impact liability, and (3) Plaintiffs have no proof of the requisite robust causal connection between any policy and a discriminatory effect. The Court should sua sponte dismiss Plaintiffs’ remaining claim with prejudice.
Dated: August 3, 2015
DORSEY & WHITNEY LLP
By s/Skip Durocher
Skip Durocher (#0208966) firstname.lastname@example.org Meghan L. DesLauriers (#0389034) email@example.com Ben D. Kappelman (#0395122)
firstname.lastname@example.org Jessie E. Mischke(#0392431)
Elizabeth A. Sellers (#0395652)
Suite 1500, 50 South Sixth Street Minneapolis, MN 55402-1498
Telephone: (612) 340-2600
Facsimile: (612) 340-2868 SAMUEL J. CLARK
Portia Hampton-Flowers (#210869)
Deputy City Attorney
Cheri M. Sisk, (#32999)
Assistant City Attorney
750 City Hall and Court House
15 West Kellogg Boulevard
Saint Paul, MN 55102
Telephone: (651) 266-8770
Fax: (651) 266-8787
Attorneys for Defendant City of St. Paul